SPIEGEL: Microsoft will presents a whole array of new products at the end of this week. Is this the beginning of a comeback to former glory?

Mundie: I believe that Microsoft never lost it’s relevance. I always tell people we’re almost 40 years old now, fighting against every venture-funded good idea on the planet in the world’s most competitive industry, and we’re still here, okay? So I say, „Do you think that’s just an accident?“. I don’t think so.

SPIEGEL: Microsofts track record at anticipating technological trends hasn’t been the best in the past. With the tablet Surface and the new Windows 8 software you are now targeting in particular the mobile market. Again ten years too late?

Mundie: My response is that we had a music player before the iPod. We had a touch device before the iPad. And we were leading in the mobile phone space. So, it wasn’t for a lack of vision or technology foresight that we lost our leadership position. The problem was that we just didn’t give enough reinforcement to those products at the time that we were leading. Unfortunately, the company had some executional missteps, which occured right at the time when Apple launched the iPhone. With that, we appeared to drop a generation behind.

SPIEGEL: What happened?

Mundie: During that time, Windows went through a difficult period where we had to shift a huge amount of our focus to security engineering. The criminal activity in cyberspace was growing dramatically ten years ago, and Microsoft was basically the only company that had enough volume for it to be a target. In part because of that, Windows Vista took a long time to be born.

SPIEGEL: Have you learned your lessons?

Mundie: Steve (Ballmer) made many changes, starting even at the top management level of the company. For example, there’s not a single product group president here today who was here five years ago. These changes are a reflection of the fact that we gave up leadership in some categories that turned out to be very important. Today our execution is not hampered by the same errors. We have learned our lessons. That doesn’t mean we won’t make some errors someday, but we’re at least not making the same ones again.

SPIEGEL: Which role will Microsoft play in the coming decade as an IT company?

Mundie: I think it’s going to be an interesting next decade. This is my 20th year at Microsoft. Bill Gates and Nathan Myhrvold hired me to develop the company’s capability in non-PC computing. In 1992, that seemed very avant-garde, but, of course, today we all live with computing everywhere around us.

SPIEGEL: How will the computer of the future look like and how will we interact with those devices?

Mundie: What we’re trying to do is to make the computer more like us and as helpful as an expert. To do that, we have to teach the computer to emulate more and more of the human senses, seeing, listening, speaking, as well as the tactile senses. We believe that our motion sensor Kinect will be a big part of that. The computers and the back-end cloud services are powerful enough now that we will see more of this type of technology very soon.

SPIEGEL: What would that mean, for example, for peoples homes or offices?

Mundie: For example, you’ll be able to directly ask the computer to help you. In the past, to work a computer program, you had to learn how to use the tool, and the tool had rigidity. In the future, it should be more like going to an assistant and saying, „Here is a document, make it look good,“ rather than saying „well, make this paragraph this point size and fit this font.“ A big emphasis at Microsoft is machine learning. The computer should not only be able to emulate your senses, but to appear to understand things based on learning or history. For example, for Office 365 that is in testing right now, we built a machine-learning-based assistant for your Inbox. The program looks at all your historical mail handling. From that, it makes judgments about what’s most important to you and groups those things together. How does it know? Because it has observed your behavior over some period of time.

SPIEGEL: Don’t people want to define themselves what’s important to them and what isn’t?

Mundie: That would require that people could actually describe their own behaviors, which we’ve learned they can’t do. They can’t tell you how they think enough to be able to put it into rules. The computer on the other hand is very well capable to observe your actions and deduce from that a set of behaviors or rules.

SPIEGEL: If you look ten years ahead, which role will the PC play?

Mundie: I think it will be about almost like it is today. However, it will be supplemented for example with intelligent whiteboards and displays for group discussions. Eventually, you will come into a room and the whole room will be the computer. In fact, people will be thinking more about computing and not computers. So for example, when you go into a space, you might have your phone in your pocket and your tablet in your briefcase. And if you set them down, they will all work together.

SPIEGEL: Right now, the whole industry seems to have made it the user’s problem to migrate what they care about from one device to the next.

Mundie: Yes, and I think that Microsoft may in fact be the company best positioned to help with this cacophonous situation, simply because we have a viable position in every product category, including a robust cloud service to connect all the different devices.

SPIEGEL: Still, the world doesn’t seem to pay too much attention to your innovations.

Mundie: I disagree. For example, if you look at the reviews, people who have a Windows phone actually prefer it over an Apple phone or an Android phone at this point. And Surface, I think, has met very strong, positive reviews and is really resonating with people.

SPIEGEL: Surface will be on online-sale in Germany from Friday onwards. Again, Microsoft seems to be very late with such a device. The iPad is on the market for years. Why should people care?

Mundie: Our experience is, despite some rhetoric, that most people who want to do any serious computing don’t want to do it trying to type on a glass screen. As a consequence, they always end up having two computers, a laptop and a tablet. Our dream was that you could have a no-compromises tablet experience and a click-on, high-quality keyboard, so that you don’t really need two computers. Surface fuses two worlds, and I think when people look at the engineering and design of the device, they will have an epiphany.

SPIEGEL: Besides the X-Box, Surface is Microsofts first in-house computer hardware. Why did you decide to go this way?

Mundie: Our marketing for many, many years was always through our partners. You never really bought a product directly from Microsoft, but from HP, Dell, Lenovo and alike. So, in a way, Microsoft always depended on its indirect representation through those companies. Now it became clear to us that we have to speak for ourselves. We have to tell the complete Microsoft story.

SPIEGEL: How much is industrial design part of this story? Apple for example puts a lot of emphasis on design. Does design become more important for Microsoft?

Mundie: I think it does. Surface for example is a product that gave us an opportunity to establish a new bar in this respect. Many people had said, „Oh, Microsoft technology is too bloated, it’s too fat, you guys don’t pay attention to these things.“ We think that Surface is a place where we can prove to people that this mythology is wrong. It’s a place where we get to speak to the public with our own voice about what’s possible, at an aspirational level. In part, the reason to do Surface was also to create a benchmark for our partners, saying, „look, there’s nothing intrinsic in our technology that won’t support products that operate at the upper tier; you just have to design them“.

SPIEGEL: By building your own computer hardware you effectively become a competitor of your own partners. Are you going to go it alone in the future, like Apple does?

Mundie: Apple has always had the luxury of being a software and a hardware company. I do describe that as a luxury, because you only have to think about yourself. But at least in the past, when you start to fan out and want to provide products for the whole world in every country, it’s very hard to do that on your own. We still think that it’s better to have a symbiotic relationship with our worldwide community of partners. And we are not alone with this model. Googles Android for example has gotten a big share fairly quickly by allowing several companies to participate.

SPIEGEL: There are other device categories in the making. Google presented its Google Glass-project lately. Is Microsoft interested in glasses with augmented reality?

Mundie: None of these things are particularly new or unanticipated. At a research level, we look at everything.

SPIEGEL: Microsoft Research has 850 Ph.D.-level researchers. The company invests hundreds of millions of dollars per year in research alone. Isn‘t there just enough innvoation for the money spent?

Mundie: And those people just don’t know what they’re talking about. I keep score every year how many things come out of research into the product group, and these transfers are counting in the hundreds. Microsoft Research is the world’s largest computer science research operation. I have seven labs, and each of them compares well to the faculty of a pretty good-size university computer science department. What this research provides to Microsoft is long-term nourishment. We think that, unless you have the ability to play with big ideas and to do fundamental research, you eventually run out of gas.

SPIEGEL: When Windows 95 was launched, in 1995, computer geeks lined up to buy the first copies. Bill Gates paid three million dollars to the Rolling Stones for rights to use their classic „Start Me Up“ as the softwares’ theme song. Nothing like that happens now. Has Microsoft losts its cool?

Mundie: It’s hard to keep your cool against young companies. But I do think it’s important to be cool. And the thing that always shows me that Microsoft can be cool is the whole Xbox business. We are worldwide number one in game consoles. This shows that when we package and present ourselves right, there is no stigma associated with being Microsoft.

SPIEGEL: The stigma seems to be more prevalent in the PC business right now. The package hasn’t been right in the past?

Mundie: I think we are able to learn. The phones and now the Surface are showing that our ability to sprinkle the fairy dust and have the coolness is growing. However, people have to understand that we are in a dilemma. A huge part of Microsoft’s revenue is to businesses, and if you’re a business, the last thing you want is us to be cool, because we’re providing you with your mission-critical infrastructure. Guys who buy infrastructure don’t buy cool, okay? Because they want you to be reliable like a rock. It is a lot easier to have the cool part emerge when you don’t have the enterprise part. But that’s a very critical part of our business.

SPIEGEL: Still, some industry experts predict that Microsoft will become the next big technology giant to slip into obscurity if the company can’t reinvent itself.

Mundie: I’ve been telling people to think about it like being in the Olympics. From the very beginning, the Olympics not only had the individual events, but they had the decathlon. Why? Well, they not only wanted to not know who could win each race in track and field, but they wanted to know who was the best overall athlete. I like to think that Microsoft will come to be recognized as the best athlete in computing.